Editor’s Note: This is an excerpt from Nicholas Webb’s “The Innovation Mandate,” his new book which shows leaders a step-by-step process to continually generate great ideas, implement them, and maximize their value to benefit both customers and investors.
Every successful business must devote itself to accomplishing certain things. The reward for doing them is profitability and growth. The penalty for failing to do them is bankruptcy. Call these things mandates, if you will. The number one mandate for every business is to make a profit. No matter what else you do, if you do not make a profit, sooner or later no one will lend you any more money, your suppliers will demand payment, and the bank will padlock your front door. Making a profit is non-negotiable. There are other mandates, all of which contribute to success. Growth is a mandate. If your business does not grow, it will be left behind.
Quality is a mandate. You must make the highest quality product or offer the highest quality service you can. You must do this because you have your own standards of professionalism and because your competitors are relentlessly striving to improve their own performances.
Value is a mandate. Your business must provide more benefit per dollar than your competitor.
Knowing what your customer craves is a mandate. You do this by engaging with them and connecting with them across a multitude of channels.
Depending on your industry, there may be other mandates, such as sustainability or transparency. They are the things you absolutely must do to stay in business.
This book is about one more mandate, which is just as important as the ones that have been long established. It is the Innovation Mandate.
To be blunt: If your organization does not innovate, it is headed for an early demise.
This is because right now, today, we are experiencing two business conditions that we have never seen before.
1. The rate of change in business and technology is accelerating.
For example, a solution or innovation that 20 years ago might have had a useful life of two years now has a life of six months. The innovation cycle time has sped up, and with it the amount of resources and human energy you and your organization need to invest in keeping ahead of the pack.
2. The severity of disruption is increasing.
The lifespan of the average company will soon be on par with that of a fruit fly. This is because the disruptive forces that can obliterate a company are more powerful than ever before. Analyses of the S&P 500 reveal that as recently as 1995, the average lifespan of a company on the S&P 500 was thirty years; today it’s down to fifteen. Half of the companies that appeared on the S&P 500 in 2000 have been taken off.
Many experts predict that by 2028 the tenure of the average company on the list could be as low as 10 years.
Innovate or not, choice is yours
What does this mean to you? It means that while you and your company are currently innovating by embracing new inventions, systems or business strategies, and you are probably doing a good job of it, you cannot take anything for granted. The competition is fierce, and unless you’re an innovation leader, you are not doing enough.
“Sparks of innovation make companies stronger, and companies that generate more good ideas have more profitable growth”
For example, you might be doing a good job introducing new technologies to the marketplace, but your business systems are the same ones they were using back when people were renting videos from Blockbuster.
Or you have got the most up-to-date human resources policies, including flexible scheduling and salary transparency, but your budget is still being run off the same Excel spreadsheets you used when you were in college.
To be a leader in your industry—and stay on top for longer than a nanosecond—you need to cultivate and exploit innovations in every corner of your business.
On your social media platform. In human resources. In office management. In your supply chain. And yes, in your products.
Sounds like a big job, does it not? A little overwhelming? Not to worry. Believe it or not, you can create a system of company-wide innovation that identifies and nurtures innovative ideas from anywhere, just like you have a system for marketing or budgeting.
Little sparks matter
The key is to think of innovative ideas as being like little sparks. These tiny points of light and heat flare up in the most unexpected places. The trick is to spot them before they fizzle out—because believe me, they don’t last long. Blink and they’ve vanished. You need to capture them and preserve them and give them oxygen so they will burn brighter. If they prove to be useful, you can develop them into fully realized, actionable ideas that shine bright and last a long time.
Of course, if you have a research and development team, you expect your people to create lots of these little sparks. But even in a formal R&D setting, these valuable glimmers can be overlooked and allowed to waste away into cold little cinders. In the pages of this book—as cautionary tales—I will include some truly scary examples of potentially revolutionary innovations that were ignored, overlooked, and allowed to vanish into darkness.
Let us get back to your innovation system, which I am going to show you how to set up and operate. I think you will find it easier than putting together a bookshelf from IKEA.
I will show you the three key phases to creating a practical and durable system of innovation in your organization.
The first is your innovation mission. This is the overall roadmap that will guide your efforts. It is not unlike the mission of the organization as a whole; the difference is that it is focused only on innovation. A big chunk of the book will be devoted to your innovation mission, because it’s like the foundation of a skyscraper: It has to be rock solid.
“The key is to think of innovative ideas as being like little sparks. These tiny points of light and heat flare up in the most unexpected places.”
Your innovation mission provides the direction for your innovation operating system. Just like the operating system in your computer, it manages all the moving parts that go into a robust system for producing and exploiting new ideas, inventions, and processes.
The heart of the innovation operating system is your innovation pipeline. It is the step-by-step process whereby the sparks of new ideas become bright shining stars of innovation. The idea of a pipeline should be familiar to you—I will bet you already have a sales pipeline for converting prospects into customers, or a hiring pipeline for screening job applicants, evaluating them, and eventually onboarding them. Your innovation pipeline is no different and should be a ubiquitous part of your everyday operations.
On Fortune Magazine’s list of the 100 fastest-growing companies, all are innovation superstars. From the top of the list—companies including Natural Health Trends, Paycom Software, and LendingTree—to the bottom, the one thing they all have in common is a relentless drive to capture those tiny flickering sparks, develop them, and turn them into cutting-edge products or business practices.
Sparks of innovation make companies stronger, and companies that generate more good ideas have more profitable growth. Sparks are generated in a culture of innovation. This means that innovation is not just a localized project or a one-time push; it is baked into the very essence of the organization.
Bottom line—Innovation is the new business mandate.